U.S. technology conglomerate Honeywell (HON) is set to release its Q2 earnings report this week. This has some investors wondering whether it is a good idea to buy shares of HON beforehand.
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What Wall Street Expects
Wall Street is expecting HON to report a 6% leap in year-over-year quarterly earnings to $2.64 per share. Revenues are forecasted to be $10 billion, marking a year-over-year increase of 4.6%.
Will HON be able to beat these estimates? As can be seen below, it has a very strong track record in doing just that.
Key Issues Ahead of Earnings
HON reported an 8% hike in Q1 revenues to $9.8 billion with orders reaching $10.6 billion, marking a 3% year-over-year increase. It also had a record backlog of $36.1 billion.
Earnings per share remained flat at $2.22, while adjusted EPS rose by 7% to $2.51.
The company reported impressive growth in its aerospace segment, yet acknowledged challenges posed by tariffs and the broader economic environment. It also highlighted a drop in sales in the industrial automation segment driven by reduced demand for personal protective equipment, particularly in China and Europe. This has raised some concerns about the company’s revenue balance.
These issues will come to the fore again in the Q2 report, as will concerns over the company’s operating margin, which could fall during the period. That’s down to costs from investments in digital infrastructure and business integration.
Questions may also be asked about the group’s M&A plans after Chief Commercial and Strategy Officer Ben Driggs recently told Bloomberg. “There is absolutely growth in defense that we want to take advantage of.”
Is HON a Good Stock to Buy Now?
On TipRanks, HON has a Moderate Buy consensus based on 6 Buy and 5 Hold ratings. Its highest price target is $268. HON stock’s consensus price target is $251, implying a 6.10% upside.
